Options expiration....and we are looking strong in the premarket. Can we hold up? or is this a nice rally to sell?
Friday, April 20, 2012
Thursday, April 19, 2012
April 19 Mid-morning update
Discussing the trading action in some of your key earnings movers including BAC, EMC, QCOM, AXP, and EBAY. And a look ahead to AAPL next week. Street in many cases still "yearning for better earnings".
Street Yearning For Better Earnings?
As we review the early results for this quarter’s earnings, the street's expectations are not being satisfied. Or shall I say even though many companies are meeting or beating the street, it is not good enough. Dare I say the market is priced to perfection and no matter what the results are, we are destined for a selloff.
Beginning with Google (NASDAQ:GOOG), who supposedly did everything right by meeting expectations and announcing a stock split. The end result, GOOG has been punished. After closing at 651.01 on Thursday, GOOG is now flirting with major support at 600.00, which if taken out, could trigger a quick drop to 580.00 or even 560.00.
Along these lines, JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) did not disappoint the street, but they have not rallied either. Although both issues sold off sharply on the initial news, they have recouped those losses and are flat since their respective announcements. But since they both had monster run-ups going into their earnings, it is difficult to see what the driver will be going forward.
Goldman Sachs (NYSE:GS) cannot decide what to do since its earnings announcement. Although the results can be construed as a slight miss, they really are not. The comparison to last year’s first quarter results is unfair since those results were askew from the rest of the year. At this time, its modest increase in dividend has not offset the negative vibes surrounding GS since “Muppetgate”.
And how about two stocks that did disappointed the street, International Business Machines (NYSE:IBM) and Intel (NASDAQ:INTC), they are getting punished. IBM who had been clinging on to the major support in the 202.00 area has now given way. If the path it took after its last positive announcement is any indication (straight up for three months), then the path it takes after a negative announcement might indicate that it is time to exit IBM.
INTC has recovered nicely from its premarket beating and is trading well off its opening low. However, expect the sellers to come out in droves if INTC can claw its way back to the 28.50-28.78 level.
Another stock in big technical trouble after earnings is Johnson&Johnson (NYSE:JNJ). After trading between 64.00-66.32 for the entire year, JNJ has made a break to the downside. And every time it sneaks above 64.00 it gets beat right back down. Furthermore, on its earlier travels through the 64, 65 and 66 handles, JNJ had to claw through huge institutional sell orders at all the half and whole numbers. The big boys appear to be out and most likely they are waiting to see what plans the new management has to increase earnings for JNJ.
So far the big and somewhat surprising winner is Coca Cola (NYSE:KO). I really did not notice folks drinking that much Coke this quarter but apparently they were overseas, as sales increased across the pond. Stay focused on the 74.50 level as KO visited that level earlier in the month, sold off, and has now revisited it. If in fact, KO can close above that level, the rally can continue. But until it can break-out over that 74.50 level it is a low-risk short.
And what about Wednesday’s announcements, American Express (NYSE:AXP) and Qualcomm (NASDAQ:QCOM) both surpass expectations and both are trading lower. Of course, one may attribute the price action to specific company comments about forward guidance. In my opinion, it further supports the premise that no matter how the earnings are coming out, they are not good enough. That coupled with the massive rally in these issues makes them prone to wicked selloffs, because believe it or not, some investors do take profits.
Which sets us up for next Tuesday's big earnings announcement, Apple Inc. (AAPL). Of course, the whole world knows that AAPL is going to beat the street (by the world I mean Wall Street analysts, many of whom raised their price and earnings targets after the stock rallied). Perhaps they are letting the P (price) affect their E(earnings) views which is not the way it should be. But my question for the AAPL bulls is twofold. First of all, after this quarter that will be driven by the new I-pad, what will be the next catalyst for this stock. In other words, how many more technological advancements could Steve Jobs have left behind before his passing in October? What in the world could people possibly need? Or was the reason for AAPL finally paying a dividend, is that the company really doesn't have a lot of need for their excess cash.
This market's early earnings announcements have been okay, but the pricing action after the reports has suggested that this market is priced for perfection. More importantly, many of the issues that have beat and soared in the premarket have failed to reach those levels during the regular session. Unfortunately, no matter what earnings results have been so far, good or bad, traders have been more willing to sell the news than buy into it.
Beginning with Google (NASDAQ:GOOG), who supposedly did everything right by meeting expectations and announcing a stock split. The end result, GOOG has been punished. After closing at 651.01 on Thursday, GOOG is now flirting with major support at 600.00, which if taken out, could trigger a quick drop to 580.00 or even 560.00.
Along these lines, JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) did not disappoint the street, but they have not rallied either. Although both issues sold off sharply on the initial news, they have recouped those losses and are flat since their respective announcements. But since they both had monster run-ups going into their earnings, it is difficult to see what the driver will be going forward.
Goldman Sachs (NYSE:GS) cannot decide what to do since its earnings announcement. Although the results can be construed as a slight miss, they really are not. The comparison to last year’s first quarter results is unfair since those results were askew from the rest of the year. At this time, its modest increase in dividend has not offset the negative vibes surrounding GS since “Muppetgate”.
And how about two stocks that did disappointed the street, International Business Machines (NYSE:IBM) and Intel (NASDAQ:INTC), they are getting punished. IBM who had been clinging on to the major support in the 202.00 area has now given way. If the path it took after its last positive announcement is any indication (straight up for three months), then the path it takes after a negative announcement might indicate that it is time to exit IBM.
INTC has recovered nicely from its premarket beating and is trading well off its opening low. However, expect the sellers to come out in droves if INTC can claw its way back to the 28.50-28.78 level.
Another stock in big technical trouble after earnings is Johnson&Johnson (NYSE:JNJ). After trading between 64.00-66.32 for the entire year, JNJ has made a break to the downside. And every time it sneaks above 64.00 it gets beat right back down. Furthermore, on its earlier travels through the 64, 65 and 66 handles, JNJ had to claw through huge institutional sell orders at all the half and whole numbers. The big boys appear to be out and most likely they are waiting to see what plans the new management has to increase earnings for JNJ.
So far the big and somewhat surprising winner is Coca Cola (NYSE:KO). I really did not notice folks drinking that much Coke this quarter but apparently they were overseas, as sales increased across the pond. Stay focused on the 74.50 level as KO visited that level earlier in the month, sold off, and has now revisited it. If in fact, KO can close above that level, the rally can continue. But until it can break-out over that 74.50 level it is a low-risk short.
And what about Wednesday’s announcements, American Express (NYSE:AXP) and Qualcomm (NASDAQ:QCOM) both surpass expectations and both are trading lower. Of course, one may attribute the price action to specific company comments about forward guidance. In my opinion, it further supports the premise that no matter how the earnings are coming out, they are not good enough. That coupled with the massive rally in these issues makes them prone to wicked selloffs, because believe it or not, some investors do take profits.
Which sets us up for next Tuesday's big earnings announcement, Apple Inc. (AAPL). Of course, the whole world knows that AAPL is going to beat the street (by the world I mean Wall Street analysts, many of whom raised their price and earnings targets after the stock rallied). Perhaps they are letting the P (price) affect their E(earnings) views which is not the way it should be. But my question for the AAPL bulls is twofold. First of all, after this quarter that will be driven by the new I-pad, what will be the next catalyst for this stock. In other words, how many more technological advancements could Steve Jobs have left behind before his passing in October? What in the world could people possibly need? Or was the reason for AAPL finally paying a dividend, is that the company really doesn't have a lot of need for their excess cash.
This market's early earnings announcements have been okay, but the pricing action after the reports has suggested that this market is priced for perfection. More importantly, many of the issues that have beat and soared in the premarket have failed to reach those levels during the regular session. Unfortunately, no matter what earnings results have been so far, good or bad, traders have been more willing to sell the news than buy into it.
April 19 Premarket update
In the middle of earnings season, and still a mixed bag. BAC, MS, EBAY, VZ rallying off their reports, and QCOM, EMC, YUM disappointing the street. What's the trade?
Wednesday, April 18, 2012
April 18 10:30 update
IBM opens at support, bounces, but now drifting down. GOOG starting to look weak. SLB rallies in sympathy with HAL.
Tuesday, April 17, 2012
AAPL Hit With "GMFO" Orders
If you have been trading for any period of time, you certainly know what that acronym stands for. But if not I'll try to clarify as much as I can. GMFO = Get Me F...ing Out!
After relatively mild opens (even some with an upward bias) during Apple's 72 point nosedive, today was the first time you had a “flush out” open, slicing through a critical support level (578.00). And who do think exited on that open and where do you think their stops were filled at? The “little guy” and at 571.91. You also had the “I am finally going to get short” crowd piling in, vowing not to miss the move down to 550.00.
And what happened? After the “GMFO” orders were executed and ill-timed shorts entered the market, a wicked 28 point rebound followed. Now what for AAPL? Although there is going to be a pile of orders to exit and get short around the 600.00 level, something tells me the rebound will not stop there. Instead I look for the rebound over the next few days to gravitate to between Friday’s close (605.23) and Monday’s high (610.28). At that time, we will be better able to determine if this issue is destined for new all time highs (644.00), or if this is just a dead cat bounce with another major selloff in the cards. Keep in mind, with earnings out next week there just may be a consolidation period as traders take some money off the table, no matter what side of the market they are on.
After relatively mild opens (even some with an upward bias) during Apple's 72 point nosedive, today was the first time you had a “flush out” open, slicing through a critical support level (578.00). And who do think exited on that open and where do you think their stops were filled at? The “little guy” and at 571.91. You also had the “I am finally going to get short” crowd piling in, vowing not to miss the move down to 550.00.
And what happened? After the “GMFO” orders were executed and ill-timed shorts entered the market, a wicked 28 point rebound followed. Now what for AAPL? Although there is going to be a pile of orders to exit and get short around the 600.00 level, something tells me the rebound will not stop there. Instead I look for the rebound over the next few days to gravitate to between Friday’s close (605.23) and Monday’s high (610.28). At that time, we will be better able to determine if this issue is destined for new all time highs (644.00), or if this is just a dead cat bounce with another major selloff in the cards. Keep in mind, with earnings out next week there just may be a consolidation period as traders take some money off the table, no matter what side of the market they are on.
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